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Online Dating: A Growth Story

By Motley Fool Staff - Jul 21, 2016 at 7:42PM

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Watch Dylan Lewis and Sarah Priestley talk about the huge growth in the worldwide online dating industry. They discuss the age and geographical demographics of users, investor curiosity and some fun online-dating trivia.

In this segment from the Industry Focus: Tech podcast, Motley Fool analysts Dylan Lewis and Sarah Priestley give listeners a broad-stroke picture of just how huge the online dating market is, who the average user is, and how much the industry is expected to grow in the coming years.

A transcript follows the video.

This podcast was recorded on July 8, 2016.

Dylan Lewis: So we're talking about the online dating market today. I think it's a very interesting market. Some interesting stats, just to set us off, set some background here: Use of online dating sites or apps by 18- to 24-year-olds has tripled since 2013. Apparently, 15% of American adults have used online dating sites and apps, according to Pew Research. One in 10 American adults spends more than an hour a day on a dating app, according to Nielsen data. So there's clearly a lot of people using it.

I think any time you have this broad stroke interest in a category, naturally, investors are curious as to what's going on. So before we dive into one of the big companies involved in the space, do you want to paint a picture in terms of some industry numbers for the average users, and the size of this market?

Sarah Priestley: Sure. The industry is actually pretty large. There doesn't seem to be much analyst opinion on the industry so far, but we'll go in to talk about that later, because I think it's because people haven't been able to play the industry so well. It's actually valued at about $2.2 billion in revenue per year. The growth for the past five years has been 5% compound annual growth rate, and despite the fact that some people are saying the industry is growing down, it's actually expected to grow by $100 million per year for the next five years. So it has scope to grow. Also, China is estimated to be worth $1.6 billion by the end of this year. They're getting massively into Tinder particularly, and other online dating. And the market segment is mostly dominated by the 25- to 34-year-old category, at 33%, closely followed by 35- to 44-year-olds. So it's actually not the younger people who you would expect to be dominating the market, although they certainly are active in it.

Lewis: And the biggest player, the biggest fish in this pond, is [Match Group] (MTCH). They control 25% of all online dating services by market share. That is more than twice the next largest competitor, which is eHarmony, which is just under 12%. And then no one else in the space occupies more than 5%.

Priestley: Yeah! And there's actually an industry magazine, it's called Online Dating Magazine, and they pose it that there are, worldwide, 8,000 online dating websites and apps created every year, and only 1% of these are successful. So that just shows you the amount of people that are jumping on this bandwagon.

Dylan Lewis has no position in any stocks mentioned. Sarah Priestley has no position in any stocks mentioned. The Motley Fool recommends Match Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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